Building passive income doesn’t have to be complicated. Sometimes, the smartest moves come down to one word: consistency. If you’re looking to make your Tax-Free Savings Account (TFSA) work harder, there’s one stock I’d happily bet my entire TFSA on. That’s SmartCentres Real Estate Investment Trust (TSX:SRU.UN). With a massive portfolio of commercial real estate, a monthly dividend, and a yield around 7.2%, this Canadian REIT is built to pay you no matter what the market’s doing.
About SRU
SmartCentres is best known for its Walmart-anchored shopping centres across Canada. But it’s not just a shopping mall REIT. It’s evolving. What started as a retail-heavy real estate trust has expanded into residential, mixed-use, and self-storage development. It’s growing in ways that make its income stronger and more reliable.
As of writing, SmartCentres trades around $25.86 per unit, giving it a yield of approximately 7.2%. That dividend is paid monthly, which is music to the ears of anyone looking to generate regular cash flow in retirement, or just supplement income now. If you invested $70,000, you’d be looking at about $417.18 per month in tax-free income, or over $5,000 annually. And if you’ve built up more contribution room in your TFSA, those numbers just grow.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | INVESTMENT TOTAL |
|---|---|---|---|---|---|---|
| SRU.UN | $25.86 | 2,706 | $1.85 | $5,006.10 | Monthly | $69,977.16 |
Digging deeper
But what about the business itself? SmartCentres reported its first-quarter 2025 earnings in early May. The numbers show a dividend stock that’s steady, even in a higher-interest-rate world. It reported net rental income of $145.3 million, up from $139.2 million a year prior. Funds from operations (FFO), a key metric for REITs, came in at $0.56 per unit, slightly ahead of expectations. Occupancy sits near 98%, which is incredibly high for a REIT of this size.
One of the best parts of SmartCentres is its long-standing relationship with Walmart. Roughly 25% of its rental income comes from Walmart locations, which helps stabilize cash flows even when other retailers falter. If you’re going to rely on monthly income, it helps when the source is one of the largest companies in the world. This anchor strategy is a major reason why SmartCentres maintained strong results even when many shopping centre landlords struggled.
But it’s not just about retail anymore. The REIT is in the midst of a multi-billion-dollar transformation. Its SmartLiving brand is building residential projects in places like Vaughan, Laval, and Ottawa. There’s also SmartCentres’ push into self-storage, retirement residences, and even industrial warehouses. These projects are starting to generate revenue now and will become a growing portion of income in the years ahead. So while you’re getting paid a healthy dividend today, there’s real potential for value growth tomorrow.
Bottom line
Of course, all investments come with risk. Rising interest rates make it more expensive for REITs to borrow for development. Commercial real estate valuations have been under pressure as cap rates adjust. But SmartCentres has managed this risk well. Its debt is staggered, with many maturities not hitting until 2027 or later. It also has a strong interest coverage ratio and $1.1 billion in liquidity to keep operations flexible.
The bigger risk might be missing out. A 7.2% yield from a reliable Canadian company is hard to find, especially one that pays monthly. If you’re using your TFSA to build tax-free income, this kind of compounding can be powerful. Reinvest those dividends and you’re looking at even stronger growth over time.
So, would I bet my entire TFSA on SmartCentres? If I were building a portfolio for stable, growing income, it would absolutely be near the top of the list. The mix of dependable cash flow, strategic growth, and monthly distributions is rare. And for investors tired of the ups and downs of the market, there’s something comforting about seeing that cash land in your account like clockwork.
